Today's Veterinary Business

DEC-JAN 2017

Today’s Veterinary Business provides information and resources designed to help veterinarians and office management improve the financial performance of their practices, allowing them to increase the level of patient care and client service.

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16 Today's Veterinary Business Business Inventory costs should range from 16 to 18 percent of a practice's gross revenue. But suppose you calculate your inventory costs and find they are 20 percent or higher. Why would that be? Let's examine what might be the causative rea- sons inventory costs are too high in your practice. Extended Shelf Life I have consulted with well over 1,500 veterinary practices and, by far, the No. 1 reason inventory costs are too high is shelf life. Shelf life is the time from when a product comes into a practice to when all that product is used or sold. What is the optimum shelf life for any given inventory item? The answer is one minute or one Answer this: What are the two expense categories that practice managers or owners have the most control over and that have the most impact on profitability? If you said support staff costs and inventory costs, you would be correct. These two expense categories alone might account for 40 to 50 percent of a practice's total expenses. second! You want to have only as much inventory as you need at any given point in time. In fact, com- panies that must deal with large inventories often use what is called "just in time inventory." So, as an example, if I am making 200 cars today, then I might want to have 400 headlights in my inventory (or maybe a few more in case some get dropped). Here is another question: Is inventory an investment? If your answer is "yes," then ask yourself what inventory item have you ever purchased that appreciated in val- ue? Inventory is not an investment. Inventory is a means of making money by using or selling that item. Inventory sitting on your shelf is only costing you money. Business Take better control of your inventory By Mark Opperman, CVPM Errors in how much you choose to stock and in how you track and price products could cost you a significant amount of money.

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